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Pablo Iglesias, a founder and leading spokesperson for the Podemos movement, has cause to be delighted with Sunday’s result. (Twitter)

As predicted, Spain’s messy general election resulted in no clear winner, and none of its two largest parties could claim a majority in the lower house of Spain’s parliament.

What’s more, though two upstart parties upended the political status quo that’s existed for nearly 40 years in Spain, neither did so well that they can form a government — or even serve as a kingmaker for one of the two established parties.

While the conservative Partido Popular (PP, the People’s Party) emerged with the largest share of the vote, prime minister Mariano Rajoy has plenty of reason to despair. Much of the party’s support comes from older voters in the Spanish countryside, and the PP benefited from an electoral system that delivers slightly more seats to parties with support outside Spain’s urban centers. Nevertheless, he has lost his absolute majority, dropped 64 seats and, worst of all for Rajoy, there’s no clear or easy path to a governing majority. Though Spain’s economy has stabilized under the past four years of PP rule, unemployment remains staggeringly high (21.2%). The party’s leader since 2004, Rajoy might ultimately be pushed aside during coalition talks for a younger or more charismatic leader, like deputy prime minister Soraya Sáenz de Santamaría.

Meanwhile, the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party) suffered its worst defeat since the transition to democracy in the late 1970s. Its new leader, Pedro Sánchez, a moderate economist, simply could not convince voters to look beyond long-simmering corruption scandals (which, by the way, also plague Rajoy’s party) and the record of the prior PSOE government, which took the first steps toward the path of austerity measures in the aftermath of the 2009-10 eurozone debt crisis.

Indeed, the PSOE just barely outpolled Podemos, an anti-austerity alternative that burst onto the Spanish political scene in 2014, embracing the anti-establishment protests of the ‘indignados’ movement. Despite leading polls earlier this year, Podemos crashed as fears grew that it would cause the kind of economic pandemonium that plagued Greece after the election of the far-left SYRIZA this year. Its leading spokesperson, Pablo Iglesias, began to moderate his movement’s rhetoric, and rallied to a strong third-place finish.

The center-right liberal Ciudadanos (‘C’s,’ Citizens), a federalist, economically liberal party founded in Catalonia in 2007, made the leap from regional politics to national politics, but its leader Albert Rivera must be disappointed that it failed to steal more voters from Rajoy.

With another handful of seats going to various pro-independence Catalan parties, as well as Basque and Galician regional parties, the net result is that no one has enough seats in the 350-member Congreso de los Diputados (Congress of Deputies), the lower house of Spain’s legislature, the Cortes Generales (General Courts).

Notably, Rajoy maintained the PP’s majority, however reduced, in the far less powerful upper house, the Senado (Senate), which can be overruled on most matters (i.e., not ‘organic laws’ that deal with constitutional matters, civil rights and federalism) by majority vote of the Chamber of Deputies.Voters elected 208 senators on Sunday as well (an additional 58 senators are appointed by regional assemblies).

Two sets of statistics are worth considering.

First, the traditional major parties (the PP and PSOE) won just 50.7% of the vote in aggregate, compared to 83.8% in the 2008 election and 73.4% in the 2011 election. Obviously, that means Spain is entering a new era where coalition politics are more important. That’s not entirely unprecedented — when José María Aznar won 156 seats after the 1996 elections, he had to work with Catalan, Basque and Canarian nationalists to form a stable government. But the success of Podemos and Ciudadanos has transformed Spain’s politics from a two-party matter to a multiparty affair.

Secondly, among the four major parties to emerge from the 2015 election, it’s staggering just how evenly divided the Spanish left and right are. Together, the PP and Ciudadanos won 42.65% of the vote and the PSOE and Podemos won 42.67%. Spain’s electorate, in the broadest sense, delivered neither a mandate to a sharp left turn or a sharp right turn.

What Spain now faces is a difficult choice of among three different paths, all of which carry their own risks and challenges. Spain’s new young king, Felipe VI, will also take a more hands-on role in the coalition formation process than his father, Juan Carlos I, ever did. The good news for Spain is that the three options each mirror paths taken by three of its fellow European Union member-states in the last three years:

Germany 2013: a ‘grand coalition’ between the two established parties;

Portugal 2015: a fragile coalition government that brings together all of the parties and movements of the left; and

Greece 2012: deadlocked coalition talks lead to fresh elections.

To the extent that Spain is entering a new coalition-based era of its parliamentary politics, a reshaped Spanish political landscape might transcend 20th century fractures and the transition to democracy that’s dominated Spanish political life for a half-century.

Spain’s new young king, Felipe VI, may ultimately shape his country’s future from the Palacio Real if the unprecedented four-way race leaves no party with a majority after December 20.

Five days before the Christmas holiday, Spanish voters will go to the polls to choose a new government in an election that’s being hailed as the country’s most important since 1982.

Indeed, voter turnout may well exceed the 80% levels not seen since 1982, when Spain had only just emerged from its Francoist dictatorship and was four years away from joining the European Economic Community, the predecessor to today’s European Union. Moreover, it will also be the first general election to take place under Felipe VI, whose father Juan Carlos I abdicated in June 2014 after guiding the country’s transition to democracy in the mid-1970s.

But what makes the December 20 election so unique is that economic crisis has shattered Spain’s stable two-party electoral tradition, leaving a four-way free-for-all that could force unwieldy coalitions or a minority government at a time when the country has only just started its economic recovery. Distrust in both major parties, moreover, has opened the way for a popular far-left movement at the national level and greater discord at the regional level, most notably in Catalonia, where support for the independence movement is growing. No matter who wins power in the eurozone’s fourth-largest economy, the next Spanish government will face difficult decisions about GDP growth, lingering unemployment, and federalism and possible constitutional change.

For decades, Spanish elections were essentially, at the national level, a fight between the conservative Partido Popular (PP, the People’s Party) and the center-left Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party). In the most recent 2011 election, the PP won 186 seats in the 350-member Congreso de los Diputados (Congress of Deputies), the Spanish parliament’s lower house, while the PSOE won 110 seats.

Both parties can point to massive successes over the past three decades. Under longtime PSOE prime minister Felipe González, Spain consolidated its liberal democracy and benefited greatly from closer economic and financial ties to Europe, while Barcelona’s emergence as the host of the 1992 Summer Olympics catapulted it into a world-class city. Under conservative prime minister José María Aznar, Spain joined the core of western European countries as a founding member of the eurozone in 2002 and developed widening security ties with the United States. When the PSOE returned to power in 2004 under José Luis Rodríguez Zapatero, the government enacted same-sex marriage in 2005 and later negotiated a peaceful ceasefire with the paramilitary Basque nationalist group Euskadi Ta Askatasuna (ETA).

But the global financial crisis of 2008-09 and subsequent eurozone crisis of 2010 knocked Spain off its pedestal.

Not unlike Florida, Nevada and parts of California in the United States, property values in Spain fell as rapidly as they once climbed, and an economy driven by construction and easy credit sputtered to near-depression levels of contraction. Despite running a more parsimonious fiscal policy in the 2000s than even Germany, Zapatero’s government soon found its expenses far exceeding revenues, and his government engaged in a series of tax increases and spending cuts.

The Spanish electorate ousted Zapatero in December 2011, ushering the People’s Party back to power under Mariano Rajoy, whose main goal was to prevent Spain from needing to seek an emergency bailout. Despite some scares over the Spanish banking system in 2012, Rajoy succeeded in keeping Spain bailout-free, but at the cost of ever greater spending cuts and tax hikes. The Rajoy government’s tough fiscal medicine, to some degree, has worked. Yields on Spanish 10-year debt have steadily fallen from a high of over 7.2% in July 2012 to less than 1.8% today. For a country without economic expansion since 2008, the Spanish economy returned to fragile growth in 2014, and it maintained growth throughout 2015 — notching 1% growth in the second quarter of this year and 0.8% in the third.

But voters are not enthusiastic about the prospects of reelecting Rajoy, a leader who never quite managed to win over Spanish hearts. Spain’s unemployment rate today is still 21.2%, a drop from the record-high 26.9% level recorded in early 2013. But that’s still a far higher jobless rate than anywhere else in the European Union (with the exception of Greece).

In the 2008 election, before the bottom fell out of the Spanish economy, the two major parties together won 83.8% of the vote. By 2011, that percentage fell to 73.4%. If polls are correct, that percentage could fall below 50% on Sunday, as both the PP and the PSOE struggle against the surging popularity of the anti-austerity Podemos (‘We can’) on the left and the liberal, federalist Ciudadanos (C’s, Citizens) on the right.

If the election were held today, the PP would win around 110 seats, the PSOE around 90, and Podemos and Ciudadanos would each win around 60, leaving none of them with a clear majority. The uncertainty of the four-way race has both energized the electorate (in a manner reminiscent to those first early elections in the post-dictatorship era) and enhanced the chances of post-election uncertainty that both Greece and Portugal have endured this year. Continue reading Spain readies for historic, four-way election on December 20→

Portugal’s prime minister Pedro Passos Coelho celebrates Sunday’s victory, even though it may turn out to be bittersweet. (Facebook)

The headline from Sunday’s Portuguese parliamentary election results highlighted the fact that the country’s center-right government won despite the fact that it implemented an unpopular bailout program that entailed difficult spending cuts and tax increases.

That’s true, of course, and the electoral coalition of prime minister Pedro Passos Coelho did emerge with the largest share of the vote. Later this week, it’s expected that he will receive a mandate to form a new government from Portugal’s president Aníbal Cavaco Silva.

With neither of Portugal’s mainstream parties able to win a majority of seats in the country’s 230-member, unicameral Assembleia da República (Assembly of the Republic), early elections seem certain to follow in due course. Though it’s likely that Passos Coelho’s center-right coalition, Portugal à Frente (Portugal Ahead) will indeed form a minority government, it will need the support of its chief opponent, the center-left Partido Socialista (PS, Socialist Party) to pass next year’s budget and other key measures. With the country no longer subject to the term of its prior bailout program, and with the economy set to grow for the second consecutive year in 2015, the Socialists will almost certainly demand a high price in exchange for support, including some relief from the austerity measures of the past half-decade.

A disagreement, however, could lead the country to a snap vote, perhaps as soon as next summer. While no new elections can follow for six months, no minority government since the end of the Salazar-era military dictatorship in 1974 has been able to hold onto power for a full four-year term.

In truth, no one won Portugal’s elections, and turnout dropped from 5.59 million (around 58%) in 2011, then a record low since the return of democracy, to just 5.38 million on Sunday (around 57%). The center-right’s ‘victory’ is as Pyrrhic as they come, the center-left’s modest gains belie doubts about past performance, and radical leftists haven’t received the same welcome as in crisis-struck Spain or Greece.Continue reading Why no one actually won Portugal’s parliamentary elections→

There’s no anti-EU group like Nigel Farage’s UKIP or the eurosceptic Alternative for Germany.

There’s not even an anti-immigrant force like the far-right parties of Scandinavia or Marine Le Pen’s Front national in France.

It’s still a country that only last year returned to GDP growth after four years of recession in the past half-decade, a country with a 13% unemployment rate, a country that has hemorrhaged hundreds of thousands of educated graduates to jobs elsewhere in Europe and the Lusophone world. Portugal concluded its €78 billion bailout in May 2014 ahead of schedule (and without needing a second bailout) after a program of income tax and VAT increases and cuts to social spending, wages, benefits, unemployment benefits and public-sector jobs.

That’s perhaps one reason why the current center-right government, headed by prime minister Pedro Passos Coelho, has such a good chance of at winning reelection on October 4, when voters will elect the 230 members of Portugal’s unicameral Assembleia da República (Assembly of the Republic). Polls show that his center-right electoral coalition, anchored by the Partido Social Democrata (PSD, Social Democratic Party), will win the largest share of the vote. That’s probably only because Passos Coelho was smart enough to join forces with his junior governing partner, the more socially conservative Centro Democrático e Social – Partido Popular (CDS-PP, Democratic and Social Center — People’s Party).

Together, the coalition now holds a narrow lead over the opposition center-left Partido Socialista (PS, Socialist Party), led by the charismatic former mayor of the Portuguese capital of Lisbon, António Costa, who has served as a minister in several administrations, most recently as interior minister in the cabinet of now-disgraced former prime minister José Sócrates.

Although the forces of the united Portuguese right will likely fall far short of their 2011 electoral victory, the Socialists will likewise not achieve the same clear victory of the 2009 election. While that means the newly united Portuguese right is favored to win a narrow victory, it also means that no single party will have a majority in the National Assembly.

Across Europe on Monday, officials, voters and everyone else were trying to sort through the consequences of yesterday’s voting, across all 28 member-states, to elect the 751 members of the European Parliament.

Late Sunday, I began analyzing the results on a state-by-state basis — you can read my take here on what the European election results mean in Germany, France, the United Kingdom, Italy and Spain.

This post picks up where that left off, however, with a look at some of the results in Europe’s mid-sized member-states.

With the count now almost complete, here’s where the Europe-wide parties stand:

The European People’s Party (EPP), which has been the largest group in the European Parliament since 1999, will continue to be the largest group, but with fewer seats (215) than after any election since 1994.

The second-largest group, the Party of European Socialists (PES) has 188 seats, a slight gain, but not the breakout performance for which it was hoping.

The Alliance of Liberals and Democrats of Europe (ALDE) will remain the third-largest group, notwithstanding the collapse of two of its constituent parties, the Liberal Democrats in the United Kingdom and the Freie Demokratische Partei (FDP, Free Democratic Party) in Germany.

The European Greens have won 53 seats, just two less than before the elections. The Party of the European Left, which had hoped to make strong gains on the strength of its anti-austerity message, gained nine seats to 44.

The Alliance of European Conservatives and Reformists (ECR), a slightly eurosceptic group of conservative parties, including the Conservative Party of the United Kingdom, holds steady at 46 seats — that’s a slight loss of around eight seats. The Movement for a Europe of Liberties and Democracy (MELD) gained six.

The real increase was among the ‘non-inscrits,’ the unaffiliated MEPs, which will rise from around 30 to 104. The bulk of those MEPs include the newly elected eurosceptics that have made such a big splash in the past 24 hours, including Marine Le Pen’s Front national (FN, National Front) in France.

But, in addition to being a pan-European contest with wide-ranging themes that resonate throughout the European Union, the elections are also 28 national contests, and they’ve already claimed resignations of two center-left leaders — Eamon Gilmore, of Ireland’s Labour Party, and Alfredo Pérez Rubalcaba, of the Partido Socialista Obrero Español (PSOE, Spanish Socialist Workers’ Party).

Here’s a look at how the European elections are affecting nine more mid-sized counties across the European Union: Poland, Romania, The Netherlands, Belgium, Greece, the Czech Republic, Portugal, Hungary and Sweden.

Twenty-two days later, Portugal is set to return to its center-right government, capping a month of twists and turns in a political crisis that began with the resignation of Portugal’s finance minister Vítor Gaspar and, then, the resignation of foreign minister Paulo Portas over the austerity program that Gaspar had been in charge of implementing as a condition of Portugal’s €78 billion bailout.

Portugal’s prime minister Pedro Passos Coelho (pictured above) reached a deal over a week ago to continue the center-right government led by prime minister and his Partido Social Democrata (PSD, Social Democratic Party) in coalition with the more socially conservative party Portas leads, the Centro Democrático e Social – Partido Popular (CDS-PP, Democratic and Social Center — People’s Party), soothing the mercurial Portas by appointing him deputy prime minister and giving him additional input over future bailout discussions and the course of Portuguese economic policy.

But Portugal’s president Aníbal Cavaco Silva, formerly a PSD prime minister from 1985 to 1995, and himself often the subject of Portas’s barbed criticism, refused to approve the deal, instead asking the two parties to bring the opposition center-left Partido Socialista (PS, Socialist Party) into government for a ‘grand coalition’ that would govern through June 2014, the end of the current bailout program.

Despite talks over the past week, the three parties have failed to come to an agreement, and Cavaco Silva will now approve the government, a move that’s already pushing down Portugal’s 10-year bond yield:

Obviously, the Socialists would never join a government when they lead polls by nearly 10 points, despite the fact that it was the decision by Socialist prime minister José Sócrates to seek a bailout that led to snap elections in June 2011 that brought Passos Coehlo and Gaspar to power.

Until today, Portgual’s beleaguered government looked like it would avoid crisis — just barely.

But the decision by Portugal’s president to seek a broad unity government to carry out the terms of Portugal’s bailout program has cast doubt again on whether the center-right government led by Pedro Passos Coelho will be able to serve through the end of its natural term of government in 2015 or at least long enough to see through the termination of the €78 billion bailout program in June 2014.

Despite a deal last week that saw Passos Coelho’s more conservative coalition partners agree to return to government, Portuguese president Aníbal Cavaco Silva, who served as prime minister of Portugal from 1985 to 1995, is now pushing for a broader coalition in light of risks that the government might falter again. Cavaco Silva’s top priority is that Portugal has a reliably strong government to see through the bailout program next year and to avoid snap elections now in favor of early elections sometime next June.

But that appears to have backfired, and it remains unclear just what will happen next in Portugal’s governing crisis — Cavaco Silva’s ploy may have made early elections even likelier, which are certain to become a referendum on further austerity measures in accordance with Portugal’s bailout. The political crisis comes at a time when Lisbon was set to host International Monetary Fund and European Union officials next Monday for a review of the bailout program and amid reports that Portugal will require a second bailout when the current one runs out next year.

Portugal’s most recent crisis began when finance minister Vítor Gaspar resigned on July 1 after rising complaints over the implementation of the bailout program. Gaspar, a technocratic economist first appointed after the June 2011 elections that swept Passos Coelho and his center-right Partido Social Democrata (PSD, Social Democratic Party) into power. He had become the poster child for austerity and widely reviled as Passos Coelho’s party has fallen up to 10 points behind the main center-left opposition, the Partido Socialista (PS, Socialist Party) in polls.

Passos Coelho immediately appointed treasury secretary Maria Luís de Albuquerque as Gaspar’s replacement, but the following day, his foreign minister Paulo Portas resigned. Portas, also the leader of his more socially conservative coalition partner, the Centro Democrático e Social – Partido Popular (CDS-PP, Democratic and Social Center — People’s Party), indicated that he would pull his party’s support from the coalition in opposition to the new finance minister’s appointment, arguing that it marked a continuity of policy with which Portas and his party now disagreed.

Nonetheless, a weekend deal between Passos Coelho and Portas appeared to have healed the rift — Portas would become deputy prime minister and take a larger role in steering the country’s finances, though de Albuquerque would remain as the new finance minister. Though the deal required Cavaco Silva’s approval, it seemed likely to win it this week, given that Cavaco Silva (pictured above) had been crucial in bringing Passos Coelho and Portas back together.

Instead, Cavaco Silva’s call for a unity government to include the Socialist Party as well has renewed the Portuguese political crisis, given that the Socialists and their new leader, António José Seguro, continue to push for early elections rather than join a unity government.

While Cavaco Silva may have failed, his logic isn’t unreasonable. Cavaco Silva’s goal was to steer Portugal between what he viewed as two poor alternatives — one in which he’ll have to trust Portas and the conservative Christian Democrats to see through the bailout program, and another in which Portugal faces snap elections that could result in a hung parliament (or worse, if the two major leftist blocs outperform already robust expectations).

Portuguese finance minister Vítor Gaspar (pictured above) spoke to a small audience at the Brookings Institution Tuesday, notably less than 36 hours after Cyprus and the ‘troika’ of the European Commission, the European Central Bank and the International Monetary Fund agreed on the terms for a Cypriot bailout — the fifth such eurozone bailout during the currency zone’s sovereign debt crisis.

Of course, Portugal is one of those of other five countries, and Gaspar, for the past 21 months, has been responsible for implementing the terms of Portugal’s own bailout program.

Gaspar presented as optimistic a case as possible for Portugal’s current economic state on Tuesday. But he admitted that despite gains in lowering the country’s budget deficit, restoring Portuguese banks to greater health, and boosting the growth of Portuguese exports (the latter as much a sign of painful ‘internal devaluation’ of wages and incomes within Portugal as any sign of newfound productivity or competitiveness), Portugal’s GDP growth and employment rate remain problematic. The Portuguese economy contracted by 1.6% in 2011 and 3.2% in 2012, and is expected to contract by a further 2.3% in 2013, while its unemployment rate, as of the last quarter of 2012, is 16.9%, its highest level yet.

As Gaspar noted, Portugal’s economy — second only to Italy’s — was already on the ropes when it entered the eurozone. In particular, from 1990 to 2012, he claimed that the Portuguese economy marked a poorer performance than either Japan during its ‘lost decade’ or the United States during the Great Depression. Regardless of whether that’s exactly right, there’s no denying that Portugal has faced long-term structural problems — since 2000, it’s notched GDP growth in excess of 2% just once (in 2007, when it grew by 2.37%, and that was at the height of the eurozone and global credit boom).

Gaspar placed much of the blame on Portugal’s failure to pursue macroeconomic stability in accordance with ‘best practices’ — i.e., Portugal simply failed to adjust properly upon accession to the eurozone 14 years ago.

Gaspar serves under prime minister Pedro Passos Coelho, whose liberal, center-right Partido Social Democrata (PSD, Social Democratic Party) came to power in the last election in coalition with the more socially conservative Centro Democrático e Social – Partido Popular (CDS-PP, Democratic and Social Center — People’s Party).

Among his solutions are greater EU-level banking union as a means of reducing the risk premium associated with peripheral economies such as Portugal’s — Gaspar added that the higher borrowing costs that constitute financial headwinds, especially in the context of budgetary adjustment.

But it was surprising not to hear any mention of the emigration of up to 1 million Portuguese from the country over the past 14 years — and nearly 250,000 since 2011 alone. Passos Coelho in late 2011 was criticized when he suggested that young, enterprising Portuguese citizens should emigrate to Portuguese-speaking countries, such as Brazil in South America, or to Angola in southeastern Africa, still in the throes of an oil boom. Angolan visas issued to Portuguese nationals jumped from just 156 in the year 2006 to nearly 150,000 by mid-2012.

Mozambique, another former Portuguese colony, apparently issues 200 visas a day to Portuguese nationals.

Invariably, that escape valve has kept Portuguese unemployment lower than the rates over 25% recorded in Spain and Greece.

Edward Hugh at A Fistful of Euros has made a very compelling case that the emigration of younger, working age Portuguese, combined with a decreasing birth rate and greater longevity has resulted in relatively fewer workers contributing to pensions and health care for relatively greater numbers of retirees, placing extraordinary long-term fiscal pressure on Portugal, given the lackluster expectations for future growth: Continue reading Gaspar defends Portuguese economic program at Brookings→

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Suffragio attempts to bring thoughtful analysis to the political, economic and other policy issues that are central to countries outside of the US -- to make world politics less foreign to the US audience. Suffragio focuses, in particular, on those countries and regions with upcoming or recent elections.